LA CONSOLACION COLLEGE TANAUAN

Accountancy Department

ACCOUNTING REVIEW

BUSINESS COMBINATION AND CORPORATE LIQUIDATION

NAME: _________________________ DATE: ________________

SECTION: ______________________ SCORE: ______________

Direction: Read and solve the following problems. Write the letter of your best answer on the space provided before each
number. Erasures are not allowed and considered wrong.

___1. Red Corporation will issue common shares with a par value P10 for the net assets of Blue Company. Red’s
common stock has a current market value of P40 per share. Blue’s Statement of Financial Position on the date of
acquisition follow:
Current Assets P320,000 Common Stock, P5 par P 80,000
Property and equipment 880,000 Additional paid in capital 320,000
Liabilities 400,000 Retained earnings 400,000
Blue’s current assets are appraised at P400,000 and the property and equipment was also appraised at P1,600,000. Its
liabilities are fairly valued. Accordingly, Red Corporation issue shares of its common stock with a total market value equal
to that of Blue’s net assets including goodwill. In order to recognize goodwill of P200,000, how many shares were to be
issued by Red?
a. 45,000 c. 50,000
b. 40,000 d. 55,000

___2. Rock Corporation was merged into Horse Company in a combination properly accounted for as an acquisition.
Their condensed Statement of Financial Position before the combination are:
Rook Horse
Current Assets P3,288,000 P1,627,600
Property and equipment, net 4,654,000 1,040,000
Patents - 260,000
Total Assets P7,942,000 P2,927,600
Liabilities P3,704,000 P 171,600
Capital stock, P100 par 2,600,000 1,300,000
Additional paid in capital 390,000 350,000
Retained earnings 1,248,000 1,106,000
Total liabilities and equity P7,942,000 P2,927,600
Per appraisal’s report, Horse assets have fair values of:
Current Assets P1,653,600
Property and equipment 1,248,000
Patents 338,000
Rook corporation purchases the net assets of Horse for P3,168,000 cash. What is the total assets of Rook Corporation
after the combination?
a. P7,354,000 c. P8,113,600
b. P7,254,000 d. P9,181,600

___3. Pete Corporation and Sol Company agreed to combine their businesses, with Pete Corporation as the surviving
entity. Pete will issue 48,000 shares of its capital stock, with a par value of P100 per share, and a fair market value of
P175 per share. Pete incurred the following additional acquisition-related costs: Professional Fees – P120,000; Broker’s
fees – P80,000; and Costs to register and issue stock – P50,000. Before combination, their respective statement of
financial position showed stockholder’s equity accounts as follows:
Pete Sol
Capital stock P7,200,000 P3,600,000
Additional paid in capital 3,120,000 360,000
Retained earnings 6,000,000 2,040,000
What is the total stockholder’s equity of Pete Corporation after the combination?
a. P24,720,000 c. P24,670,000
b. P24,470,000 d. P24,890,000

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___4. Papa Corporation issued 120,000 shares of P10 par common stock with a fair value of P2,550,000 for all the
outstanding stock of Mama Company. In addition, Papa incurred the following costs:
Professional fees to arrange the business combination P27,000
Cost of SEC registration 12,000
Cost of printing and issuing stock certificates 3,000
Immediately before the business combination in which Mama company was dissolved, Mama’s assets and equities were
as follows: Book value Fair value
Current assets P1,000,000 P1,100,000
Plant assets 1,500,000 2,200,000
Liabilities 300,000 300,000
Common stock 2,000,000
Retained earnings 200,000
What is the amount of goodwill (gain on acquisition)?
a. P408,000 c. (P450,000)
b. (P550,000) d. P520,000

___5. Using the same data in number 4, how much additional paid in capital is recorded by Papa?
a. P1,350,000 c. P1,365,000
b. P1,335,000 d. P1,330,000

___6. Using the same data in number 4, what is the amount of expense to be recognized by Papa?
a. P32,000 c. P15,000
b. P27,000 d. P12,000

___7. Using the same data in number 4, what is the net increase(decrease) in the retained earnings of Papa?
a. P450,000 c. P423,000
b. P408,000 d. P410,000

___8. On May 1,2009, the separate Statement of Financial Position of Pablo Corporation and Simon Company are as
follows:
Pablo Simon
Cash P145,700 P 15,500
Accounts receivable 120,500 35,800
Inventories 42,500 10,200
Plant assets P185,800 78,000
Total assets P494,500 P139,500
Liabilities P110,400 P 28,800
Capital stock, P100 par value 200,000 50,000
Additional paid in capital 50,000 -
Retained earnings 134,100 60,700
Total liabilities and stockholder’s equity P494,500 P139,500
On May 1,2009 Pablo acquired 100% of Simon’s outstanding capital stock for P100,000. Pablo incurred additional
P32,700 acquisition-related costs. All the assets of Simon are fairly valued except the plant assets with a fair value of
P90,000 on May 1,2009. In the consolidated balance on May 1,2009, what amount of total assets will be reported?
a. P646,000 c. P513,300
b. P490,800 d. P634,000

___9. Using the same data in number 8, what amount of stockholder’s equity will be reported in the consolidated
statement of financial position on May 1,2009?
a. P384,100 c. P351,400
b. P494,800 d. P472,600

___10. On January 1,2009, Pure Company acquired 80% interest in Sure Company for P2,000,000 cash. The
stockholder’s equity of Sure at the time of acquisition is P1,875,000. On January 1,2008, NCI is measured at its implied
fair value. The excess of cost over the book value of interest acquired is allocated to the following assets: Inventories –
P100,000 (sold in 2009) and Building – P200,000 (5-year remaining life).
During 2009, Sure Company reported net income of P500,000 and paid dividends of P100,000.

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What is the fair value of NCI on January 1,2009?
a. P500,000 c. P525,000
b. P375,000 d. P400,000

___11. Using the same data in number 10, how much goodwill (gain on acquisition) is reported in the consolidated
statement of financial position on 1/1/2008?
a. P325,000 c. P(200,000)
b. P200,000 d. P(375,000)

___12. Using the same data in number 10, what is the consolidated net income attributable to parent on December
31,2009, if Pure’s net income for 2009 is P600,000)
a. P860,000 c. P808,000
b. P888,000 d. P948,000

___13. Using the same data in number 10, what is the Noncontrolling Interest in Net Assets of subsidiary on December
31,2009?
a. P455,000 c. P495,000
b. P552,000 d. P475,900

___14. On January 1,2009, Phil. Inc. issued 400,000 additional shares of P10 par value common stock for all of Sony
Company’s common stock. Immediately before this business combination, Phil’s stockholder’s equity was P16,000,000
and Sony’s stockholder’s equity was P8,000,000. On January 1,2009. The fair market value of Phil’s stock was P20 per
share, and the fair value of Sony’s net assets was P8,000,000. Data from separate company’s 2009 operations follows:
Phil Sony
Net Income P2,500,000 P600,000
Dividends paid 900,000 -
What is the consolidated stockholder’s equity at December 31,2009?
a. P19,320,000 c. P26,200,000
b. P17,600,000 d. P18,200,000

___15. On January 1,2009, Padre Company purchased an 80% investment in Saint Company. The price paid was equal
to Padre’s interest in Saint’s net assets at that date. On January 1,2009, Padre and Saint had retained earnings of
P1,000,000 and P200,000 respectively. During 2009:
 Consolidated net income is P400,000 including NCI net income.
 Padre declared dividends of P100,000.
 Saint had net income of P80,000 and declared dividends of P40,000.
 There were no other intercompany transactions.
On December 31,2009, what is the consolidated retained earnings?
a. P1,300,000 c. P1,532,000
b. P1,284,000 d. P1,540,000

___16. Pete Company acquired a 70% interest in Steve Company in 2007. During 2008, Steve sold merchandise to pete
for P10,000 at a gross profit of P2,000. The merchandise was resold during 2009 by Pete to outsiders for P15,000. The
following are the net income of Steve Company for the years ended December 31,2008 and 2009:
December 31,2008 --- P80,000 December 31,2009 --- P90,000
What is the NCI in Steve Net Income for 2008 and 2009, respectively?
a. P24,000 and P27,000 c. P23,400 and P28,200
b. P23,400 and P26,400 d. P24,600 and P27,600

___17. Selected data for two subsidiaries of Fafa Corp. taen from December 31,2009, pre-closing trial balances are as
follows: S1 Co. Debit S2 Co. Credit
Shipments to S1 P- P150,000
Shipments from S2 200,000 -
Intercompany inventory profit
on total shipments - 50,000
Additional data relating to the December 31,2009 inventory are as follows
Inventory acquired from outside parties P175,000 P250,000
Inventory acquired from S2 60,000
At December 31,2009, the inventory reported on the combined statement of financial position of the two subsidiaries
should be:
a. P425,000 c. P470,000

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 b. P435,000 d. P485,000

___18. PC Corporation purchased 80% interest in SD Company for P600,000 on January 1,2008, at which time SD’s
stockholder’s equity amounts to P700,000. The excess cost over book value was assigned to goodwill which is not
amortized. Income statements of the two companies for 2009 are as follows:
PC SD
Sales P1,000,000 P500,000
Income from subsidiary – SD 112,000
Cost of sales (400,000) (250,000)
Operating expenses (220,000) (100,000)
Net income P 492,000 P150,000
During 2008, SD sold inventory items to PC for P80,000. This merchandise cost SD P50,000 and ¼ of it remained in PC’s
December 31,2009 inventory. During 2009, SD’s sales to PC amounted to P90,000. This merchandise cost SD P63,000
and ½ of it remained in PC’s December 31,2009 inventory. What is the consolidated net income attributable to parent on
December 31,2009?
a. P492,600 c. P495,200
b. P492,000 d. P490,000

___19. On January 2,2009, PG Corporation sold equipment costing P100,000 with accumulated depreciation of P25,000
to its wholly-owned subsidiary, SM Inc. The selling price was P90,000. PG was depreciating the equipment on the
straight-line method over 20 years with no salvage value. SM Continued this depreciation. What are the cost and
accumulated depreciation, respectively, of this equipment in the December 31,2009 Consolidated Statement of Financial
Position?
a. P75,000 and P3,750 c. P90,000 and P29,500
b. P90,000 and P4,500 d. P100,000 and P30,000

___20. On January 1,2007, SST Company purchased a computer with an expected life of 5 years. On January 1,2009,
SST Company sold the computer to PMN Corporation and recorded the following entry:
Cash 39,000
Accumulated depreciation 16,000
Computer equipment 40,000
Gain on sale of equipment 15,000
PMN Corporation holds 60% of the voting shares of SST Company. SST Company and PMN Corporation reported
income from its own operations of P45,000 and P85,000 for 2009 respectively. There is no change in the estimated life of
the equipment as a result of the intercompany sale. What is the consolidated net income attributable to parent for 2009?
a. P103,000 c. P112,000
b. P106,000 d. P130,000

___21. SS Corporation is 80% owned by PP Inc. On January 1,2003, SS Corporation paid 100,000 for a truck with an
expected economic life of 10 years and no residual values. SS Corp. sold the truck to PP Inc. on January 1,2009. During
the preparation of the consolidated working paper for 2009, the following working paper entry was made to eliminate the
effects of the intercompany truck sale:
Truck 48,000
Gain on sale of truck 12,000
Depreciation expense 3,000
Accumulated depreciation 57,000
What amount of depreciation expense was recorded by PP Inc. during 2009?
a. P10,000 c. P50,000
b. P13,000 d. P5,200

___22. The accountant of Holy Company under liquidation provided the following data:
Assets at book value P100,000
Assets at net realizable value 75,000
Liabilities at book value:
Fully secured mortgage payable 40,000
Unsecured accounts and notes payable 45,000
Unrecorded liabilities:
Interest on bank notes 250

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 Administrative expenses 4,000
A trustee is appointed to liquidate the company. The entry made by the trustee to record the assets and liabilities should
include estate equity of:
a. P14,250 c. P10,250
b. P14,000 d. P10,520

___23. Using the same data in number 22, what is the estimated deficiency to unsecured creditors?
a. P35,000 c. P14,250
b. P31,000 d. P10,000

___24. A review of the assets and liabilities of Car Company in bankcruptcy on June 30 discloses the following:
 A mortgage payable of P350,000 is secured by land and building valued at P560,000.
 Notes payable of P175,000 are secured by equipment valued at P140,000.
 Assets other than those referred to have an estimated value of P157,500.
 Liabilities other than those referred to, total P420,000, which included claims with priority of P52,500.
What is the estimated deficiency to unsecured creditors?
a. P414,000 c. P87,500
b. P402,000 d. P35,000

___25. Luna Company has had severe financial difficulties and is considering the possibility of liquidation. At this time, the
company has the following assets (stated at net realizable value) and liabilities:
Assets (pledged against liabilities of P70,000) P116,000
Assets (pledged against liabilities of P130,000) 50,000
Other assets 80,000
Liabilities with priority 42,000
Unsecured creditors 200,000
In liquidation, how much would be paid to the partially secured creditors?
a. P130,000 c. P74,000
b. P50,000 d. P200,000

___26. Manila Company filed a voluntary bankruptcy petition on June 1,2008 and the Statement of Affairs reflects the
following amounts:
Book Value Estimated Realizable Value
Assets:
Assets pledged with fully secured creditors P160,000 P190,000
Assets pledged with partially secured creditors 90,000 60,000
Free assets 200,000 140,000
Liabilities:
Liabilities with priority P 20,000
Fully secured creditors 130,000
Partially secured creditors 100,000
Unsecured creditors 260,000
Assume that the assets are converted into cash at the estimated realizable values and the business is liquidated. How
much is the estimated amount to be paid to partially secured creditors?
a. P60,000 c. P100,000
b. P90,000 d. P84,000

___27. The following data were taken from the statement of affairs of Malakas Company:
Book Value Fair Value Book Value
Assets: Liabilities:
Cash P 6,000 P 6,000 Accounts payable P 95,000
Accounts receivable 60,000 60,000 Wages payable (all have priority) 9,500
Inventories 90,000 65,000 Taxes payable 14,000
Land 100,000 80,000 Notes payable (secured by AR and Inventories) 190,000
Building (net) 220,000 160,000 Interest on notes payable 5,000
Equipment (net) 250,000 100,000 Bonds payable (secured by land and buildings) 220,000
Interest on bonds payable 11,000
What is the estimated deficiency to unsecured creditors?
a. P73,500 c. P68,500
b. P73,000 d. P68,000

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___28. Using the same data in number 27, what is the amount to be paid to partially secured creditors?
a. P163,150 c. P161,043
b. P163,815 d. P161,000

___29. The PAL Company has decided to seek liquidation after previous restructuring and quasi-reorganization attempts
failed. The company has the following condensed statement of financial position as of May 1,2011:
ASSETS LIABILITIES & STOCKHOLDER’S EQUITY
Cash P 12,000 Accrued payroll P 40,000
Receivables (net) 280,000 Loans from officer 50,000
Inventory 70,000 Accounts payable 60,000
Prepaid expenses 1,000 Equipment loan payable 360,000
Plant assets 300,000 Business loan payable 180,000
Goodwill 39,000 Common stock 60,000
Deficit (48,000)
Total P 702,000 Total P 702,000
The equipment loan payable is secured by specific plant assets having a book value of P300,000 and a realizable value of
P350,000. Of the accounts payable, P40,000 is secured by inventory which has a cost of P40,000 and a liquidation value
of P44,000. The balance of the inventory has a realizable value of P32,000. Receivables with a book value and market
value of P100,000 and P80,000 respectively have been pledged as collateral on the business loan payable. The balance
of the receivables have a realizable value of P150,000. Assuming trustee expenses of P12,000 in addition to recorded
liabilities, which of the remaining unsecured creditors has the next highest order of priority?
a. Accrued payroll c. Loan from officer
b. Equipment loan payable d. Business loan payable

___30. Using the same data in number 29, the realizable value of assets pledged with fully secured creditors is:
a. P459,000 c. P40,000
b. P44,000 d. P489,000

___31. Using the same data in number 29, of those creditors who are partially secured, their unsecured amounts are:
a. P430,000 c. P540,000
b. P110,000 d. P120,000

___32. Using the same data in number 29, the total realizable value of free assets to unsecured creditors before
unsecured creditors with priority is:
a. P628,000 c. P220,000
b. P232,000 d. P198,000

___33. Using the same data in number 29, the dividend to unsecured creditors or the expected recovery percentage of
unsecured creditors (rounded) is:
a. 90% c. P88%
b. 100% d. 76%

___34. Using the same data in number 29, estimated deficiency to unsecured creditors is:
a. P -0- c. P2,000
b. P22,000 d. P12,000

___35. Using the same data in number 29, estimated loss on asset disposition is:
a. P51,000 c. P61,000
b. P89,000 d. P90,000

___36. Using the same data in number 29, estimated gain on asset disposition is:
a. P56,000 c. P52,000
b. P54,000 d. P6,000

___37. Using the same data in number 29, estimated amount paid to unsecured creditors with priority is:
a. P10,000 c. P40,000
b. P30,000 d. P110,000

___38. Using the same data in number 29, estimated amount paid to fully secured creditors is:
a. P40,000 c. P470,000
b. P390,000 d. P430,000

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___39. Using the same data in number 29, estimated amount paid to unsecured creditors without priority is:
a. P70,000 c. P20,000
b. P61,600 d. P50,000

___40. Using the same data in number 29, estimated payment to partially secured creditors is
a. P358,800 c. P168,000
b. P526,800 d. P430,000

___41. Using the same data in number 29, estimated payment to creditors is (round off)
a. P580,000 c. P571,000
b. P659,600 d. P668,400

___42. Fray acquires assets and liabilities of Mine on January 1,2011. To obtain these shares, Fray pays 400,000 and
issues 10,000 shares of P20 par value common stock on this date. Fray’s stock had a fair value of P36 per share on that
date. Fray also pays P15,000 to a local investment firm for arranging the transaction. An additional P10,000 was paid by
Fray in stock issuance costs. The book values for both Fray and Mine as of January 1,2011 follow. The fair value of each
of Fray and Mine accounts is also included. In addition, Mine holds a fully amortized trademark that still retains a P40,000
value. Fray Inc. Mine Inc.
Accounts Book Value Fair Value Book Value Fair Value
Cash P900,000 P900,000 P 80,000 P 80,000
Receivables 480,000 500,000 180,000 160,000
Inventory 660,000 700,000 260,000 300,000
Land 300,000 250,000 120,000 130,000
Buildings (net) 1,200,000 1,300,000 220,000 280,000
Equipment (net) 360,000 300,000 100,000 75,000
Accounts payable 480,000 480,000 60,000 60,000
Long-term liabilities 1,140,000 1,200,000 340,000 300,000
Common stock 1,200,000 80,000
Retained earnings 1,080,000 480,000
Assuming the combination is accounted for as an acquisition, immediately after the acquisition, in the statement of
financial position of Fray Inc. What amount will be reported for goodwill?
a. P55,000 c. P70,000
b. P65,000 d. P135,000

___43. Using the same data in number 42, what amount will be reported for receivables?
a. P660,000 c. P500,000
b. P640,000 d. P460,000

___44. Using the same data in number 42, what amount will be reported for inventory?
a. P960,000 c. P700,000
b. P920,000 d. P620,000

___45. Using the same data in number 42, what amount will be reported for buildings (net)
a. P1,420,000 c. P1,140,000
b. P1,260,000 d. P1,480,000

___46. Using the same data in number 42, what amount will be reported for equipment (net)
a. P385,000 c. P435,000
b. P335,000 d. P360,000

___47. Using the same data in number 42, what amount will be reported for long-term liabilities?
a. P1,480,000 c. P1,180,000
b. P1,440,000 d. P1,100,000

___48. Using the same data in number 42, what amount will be reported for common stock?
a. P1,200,000 c. P1,400,000
b. P1,280,000 d. p1,480,000

___49. Using the same data in number 42, what amount will be reported for retained earnings?
a. P1,065,000 c. P1,525,000

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 b. P1,080,000 d. P1,560,000

___50. Using the same data in number 42, what amount will be reported for additional paid in capital?
a. P165,000 c. P160,000
b. P150,000 d. P175,000

___51. Using the same data in number 42, what amount will be reported for cash after the purchase transaction?
a. P980,000 c. P875,000
b. P900,000 d. P555,000

___52. Prid Corporation owns an 80% interest in Sed Corporation and at December 31,2011, Prid investment in Sed on a
cost basis was equal to 80% of Sed’s stockholder’s equity. During 2011, Sed sold merchandise to Prid for P100,000 at a
gross profit to Sed of P20,000. At December 31,2012 half of this merchandise is included in Prid’s inventory. Separate
incomes for Prid and Sed for 2012 are summarized below:
Prid Sed
Sales P500,000 P300,000
Cost of sales (250,000) (200,000)
Gross profit P250,000 P100,000
Operating expenses (125,000) (40,000)
Separate incomes P125,000 P 60,000
What is the income from Sed for 2012?
a. P48,000 c. P8,000
b. P40,000 d. P-0-

___53. Using the same data in number 52, what is the consolidated cost of sales for 2012?
a. P460,000 c. P440,000
b. P450,000 d. P360,000

___54. Using the same data in number 52, what is the noncontrolling interest in net income for 2012?
a. P60,000 c. P12,000
b. P48,000 d. P10,000

___55. Income statement information for the year 2012 for Perfect Corporation and its 60% owned subsidiary, Seven
Corporation, is as follows:
Perfect Seven
Sales P900,000 P350,000
Cost of sales 400,000 250,000
Gross profit P500,000 P100,000
Operating expenses 250,000 50,000
Seven’s net income P 50,000
Perfect’s separate income P250,000
Intercompany sales for 2012 are upstream (from Seven to Perfect) and total P100,000. Perfect’s December 31,2011 and
December 31,2012 inventories contain unrealized profits of P5,000 and P10,000, respectively. What is the consolidated
sales for 2012?
a. P900,000 c. P1,190,000
b. P1,150,000 d. P1,250,000

___56. Using the same data in number 55, what is the consolidated cost of sales for 2012?
a. P545,000 c. P555,000
b. P550,000 d. P560,000

___57. Using the same data in number 55, what is the CNI attributable to parent for 2012?
a. P277,000 c. P282,000
b. P280,000 d. P305,000

___58. Income information for 2012 taken from the separate company financial statements of Peras Corporation and its
75% owned subsidiary, Sky Corporation is presented as follows:
Peras Sky
Sales P1,000,000 P460,000
Gain on sale of building 20,000 -
Dividend income 75,000 -

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 Cost of goods sold (500,000) (260,000)
Depreciation expense (100,000) ( 60,000)
Other expenses (200,000) ( 40,000)
Net income P 295,000 P100,000
Peras gain on sale of building relates to a building with a book value of P40,000 and a 10-year remaining useful life that
was sold to Sky for P60,000 on January 1,2012.
At what amount will the gain on sale of building appear on the consolidated income statement of Peras and Sy for the
year 2012?
a. zero c. P15,000
b. P5,000 d. P20,000

___59. Using the same data in number 58, what is the consolidated depreciation expense for 2012?
a. P158,000 c. P162,000
b. P160,000 d. P180,000

___60. Using the same data in number 58, what is the CNI attributable to parent for 2012?
a. P295,000 c. P275,000
b. P277,000 d. P220,000

___61. The financial statements for Goodwin Inc. and Corr Company for the year ended December 31,2011 prior to
Goodwin’s business combination transaction regarding Corr, follow:
Goodwin Corr
Revenues P2,700,000 P 600,000
Expenses 1,980,000 400,000
Net income P 720,000 P 200,000

Retained earnings,1/1 P2,400,000 P 400,000

Net income 720,000 200,000
Dividends (270,000) ( - )
Retained earnings, 12/31 P2,850,000 P 600,000

Cash P 240,000 P 220,000

Receivables and inventory 1,200,000 340,000
Buildings, net 2,700,000 600,000
Equipment, net 2,100,000 1,200,000
Total assets P6,240,000 P2,360,000

Liabilities P1,500,000 P 820,000

Common stock 1,080,000 400,000
Additional paid in capital 810,000 540,000
Retained earnings 2,850,000 600,000
Total liability and stockholder’s equity P6,240,000 P2,360,000
On December 31,2011, Goodwin issued P600,000 debt and 30,000 shares of its P10 par value common stock to the
owners of Carr to purchase all of the outstanding shares of that company. Goodwin shares had a fair value of P40 per
share. Goodwin paid P25,000 to a broker for arranging the transaction. Goodwin paid P35,000 in stock transaction costs.
Corr’s equipment was actually worth P1,400,000 but its building were only valued at P560,000. What amount is the
investment account recorded on Goodwin’s books before consolidation?
a. P1,540,000 c. P1,825,000
b. P1,800,000 d. P1,860,000

___62. Using the same data in number 61, what is the consolidated revenues for 2011?
a. P3,300,000 c. P1,540,000
b. P2,700,000 d. P720,000

___63. Using the same data in number 61, what is the consolidated expense for 2011?
a. P1,980,000 c. P2,015,000
b. P2,005,000 d. P2,040,000

___64. Using the same data in number 61, what is the consolidated cash account at December 31,2011?
a. P460,000 c. P425,000
b. P435,000 d. P400,000

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___65. Using the same data in number 61, what is the consolidated buildings net, account at December 31.2011?
a. P2,700,000 c. P3,260,000
b. P3,370,000 d. P3,300,000

___66. Using the same data in number 61, what is the consolidated goodwill account at December 31,2011?
a. P -0- c. P125,000
b. P100,000 d. P160,000

___67. Using the same data in number 61, what is the consolidated common stock account at December 31,2011?
a. P1,080,000 c. P1,675,000
b. P1,380,000 d. P1,910,000

___68. Using the same data in number 61, what is the consolidated additional paid in capital at December 31,2011?
a. P810,000 c. P1,675,000
b. P1,350,000 d. P1,910,000

___69. Using the same data in number 61, what is the consolidated retained earnings at December 31,2011?
a. P2,800,000 c. P2,850,000
b. P2,828,000 d. P3,425,000

___70. On January 1,2011, Park Corporation and Strand Corporation and their condensed Statements of Financial
Position are as follows:
Park Corp. Strand Corp.
Current assets P 70,000 P 20,000
Non-current assets 90,000 40,000
Total assets P160,000 P 60,000
Current liabilities P 30,000 P 10,000
Long-term debt 50,000 -
Stockholder’s equity 80,000 50,000
Total liabilities and stockholder’s equity P160,000 P 60,000
On January 2,2011, Park Corporation borrowed P60,000 and used the proceeds to obtain 80% of the outstanding
common shares of Strand Corporation. The acquisition price was considered proportionate to Strand’s fair value. The
P60,000 debt is payable in 10 equal annual principal payments plus interest, beginning December 31,2011. The excess
fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60%) and
to goodwill (40%). On a consolidated statement of financial position as of January 2,2011, what is the amount of goodwill
using proportionate or partial goodwill?
a. P-0- c. P10,000
b. P8,000 d. P20,000

___71. Using the same data in number 69, what is the amount of goodwill using full fair value or total goodwill?
a. P-0- c. P10,000
b. P8,000 d. P20,000

___72. Using the same data in number 69, what is the amount of current assets?
a. P105,000 c. P100,000
b. P102,000 d. P90,000

___73. Using the same data in number 69, what is the amount of noncurrent assets using the partial goodwill method?
a. P130,000 c. P138,000
b. P134,000 d. P140,000

___74. Using the same data in number 69, what is the amount of noncurrent assets using the total goodwill method?
a. P130,000 c. P138,000
b. P134,000 d. P140,000

___75. Using the same data in number 69, what is the amount of current liabilities?
a. P50,000 c. P40,000
b. P46,000 d. P30,000

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___76. Using the same data in number 69, what us the amount of non-current liabilities?
a. P110,000 c. P90,000
b. P104,000 d. P50,000

___77. Using the same data in number 69, what is the amount of shareholder’s equity using partial goodwill?
a. P80,000 c. P95,000
b. P93,000 d. P130,000
___78. Using the same data in number 69, what is the amount of stockholder’s equity using total goodwill method?
a. P80,000 c. P95,000
b. P93,000 d. P130,000

___79. On January 1,2011, Pure Company purchased 80% of the outstanding shares of Sure Company at a cost of
P1,000,000. On that date, Sure Company had P400,000 of capital stock and P600,000 of retained earnings. On July
1,2011, Sure Company sold an equipment with a book value of P60,000 to Pure Company for P80,000. For 2011 and
2012, the results of their operations are:
2011 2012
Pure Co. Sure Co. Pure Co. Sure Co.
Net income from own operations P400,000 P200,000 P300,000 P150,000
Dividends paid 100,000 50,000 80,000 20,000
The intercompany gain is included in the net income of Sure Company. The equipment sold is expected to have a useful
life of five years from the date of sale. What is the noncontrolling interests in net assets on December 31?
2011 2012 2011 2012
a. P226,400 P256,800 c. P226,000 P252,400
b. P226,400 P253,200 d. P230,000 P256,000

___80. Scroll Inc., a wholly owned subsidiary of Pirn Inc. began operations on January 1,2012. The following information
is from the condensed 2012 income statements of Pirn and Scroll:
Pirn Scroll
Sales to Scroll P100,000 P-
Sales to others 400,000 300,000
P500,000 P300,000
Cost of goods sold:
Acquired from Pirn - 80,000
Acquired from others 350,000 190,000
Gross profit P150,000 P 30,000
Depreciation 40,000 10,000
Other expenses 60,000 15,000
Income from operations P 50,000 P 5,000
Gain on sale of equipment to Scroll 12,000 -
Income before income taxes P 62,000 P 5,000
Additional information:
 Sales by Pirn to Scroll are made on the same terms as those made to third parties.
 Equipment purchased by Scroll from Pirn for P36,000 on January 1,2012 is depreciated using the straight line
method over four years.
For purposes of consolidation on December 31,2012, what amount of intercompany profit that should be eliminated from
Scroll’s inventory and the amount of depreciation expense in the consolidated financial statements, respectively?
a. P12,000 and P50,000 c. P10,000 and P44,000
b. P20,000 and P43,000 d. P6,000 and P47,000

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